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Advisers back Govt plans to scale back pension guidance

Pension Wise jenga

Advisers have backed Government plans to “rationalise” pensions guidance after the Treasury raised concerns about overlapping services.

In a financial guidance paper published alongside the Financial Advice Market Review consultation, the Treasury suggested cuts could be made to the services offered by the Money Advice Service and Pension Wise to reduce duplication.

Currently, pension guidance is provided through Citizens Advice and The Pensions Advisory Service in the form of Pension Wise, while the MAS also publishes retirement savings information on its website.

In the paper, published this week, the Treasury said: “There is crossover in the provision of public financial guidance on pensions for decisions taken at retirement between the organisations in scope of the consultation, particularly on web content.

“In addition, with three streams of levy funding being directed towards activity which has a pensions guidance element, there may be an opportunity to rationalise the delivery of statutory pensions guidance.”

Highclere Financial Services partner Alan Lakey says: “There are too many bodies overlapping and trying to perform the same functions. It’s a bit pointless and if you stop any person in the street, I still think they won’t have heard of Pension Wise and would probably go to either the Citizens Advice or an adviser for advice.

“Many of these organisations, and MAS in particular, have been a failure in making the public more aware and achieving their goals.”

Pilot Financial Planning director Ian Thomas says: “For whatever reason, the system is confusing and people aren’t taking advantage of it, so a real root and branch review of how and where this money is being spent is a good thing.

“However, it should not just stop as asking whether we should smash all the MAS and Citizens  Advice together, it also needs to look fully at what role IFAs can provide.”

One suggestion offered by the Treasury would be a voucher sch-eme “whereby a consumer could be provided with one or multiple vouchers for financial guidance sessions which could be redeemed with a range of accredited partners”.

Treasury sources suggest partners could include private sector firms, Government organisations and charities, but add that no decisions have been made as yet.

Policymakers are still weighing whether any voucher system should be limited to guidance, or go as far as financial advice.

Personal Finance Society chief executive Keith Richards says: “A voucher system would put the consumer in a better position because if a client needed ongoing support, then they would be in the right place. The Treasury is looking to that sort of model as a possible solution.”

The Treasury paper also notes the recent decision to house Pension Wise in the Department for Work and Pensions may only be temporary.

Richards says: “There is a chance that, depending on the outcome of the FAMR process, the industry could take over the provision of guidance and that would tie in with a voucher scheme idea.

“It is encouraging that the Government is prepared to look at these things.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Why did the Treasury ignore all suggestions of a voucher system in the first place? The problem with it, of course, would probably be its administration. Advisers would experience so many difficulties redeeming their vouchers that before long they’d simply refuse to have anything further to do with it, resulting in yet more complaints from consumers.

    An alternative would be for consumers still to have to pay upfront for initial guidance from an adviser and be given a voucher which THEY would then have to redeem. They’d probably encounter all the same problems, in addition to which the scope for fraud is massive.

    What a mess.

  2. Yet again we see wasted money by those that have failed to listen. This is really very simple to understand, the vast majority of consumer cannot understand or have explained with any real reliable outcome, the complexities of the products, regulation and risks of financial products from a guidance method.

    This is like providing me with an hour meeting to provide Guidance to repair a fault with my car. The engine does not work, if I do get it started it makes a funny sound, what guidance can you give me. Well it could be your battery, it could be your big ends on the other hand it could be a number of other things, here is a list go away and read it. Having read through a manual the final guidance is that the best guidance I can give you is, go to a reliable garage as they will save you a lot of time and money in the long run. They have the knowledge, experience and equipment to identify your problem, explain it. advise you on your options, what the cost will be to repair and if needs be service the vehicle.

    Why can the politicians, regulators and consumer bodies not see this. They have spent two decades cleaning up the adviser community only to try and by pass them once achieved.

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